PRIMARY LOAN TERMS:
I. WHO MAY APPLY (LOAN APPLICANT):
Loan Applicants must be a City of Oakland Verified Equity Applicant that has received an inspection card for the space in which they intend to operate the business for which they are applying for the Equity Loan (NOTE: the inspection card does not have to be completed before applying for an Equity Loan).
II. NO INTEREST:
Oakland’s City Council mandated that the loans do not pay interest.
III. LOAN MATURITY:
4 years, or 48 months
IV. LOAN REPAYMENT:
Loan repayments will begin one month after the date on which the funds are made available to the borrower via a check (or other means acceptable by the City of Oakland). Next, monthly repayments are required, until the loan has been repaid in full. Repayment amounts will be listed on a loan repayment schedule provided to the borrower. Sample monthly payment amounts by Tier are provided on the chart below. Given that some borrowers may have loans outstanding under more than one Tier, the chart also includes a combined monthly payment for all loans received under preceding Tiers.
| Tier | Purpose | Loan Amount (Up to) |
Monthly Payment | Combined Previous Tiers Loan Amount |
Combined Previous Tiers Monthly Payment |
| Tier 1 | Establish the Business | $5,000 | $104 | $5,000 | $104 |
| Tier 2 | Get Compliant | $10,000 | $208 | $15,000 | $312 |
| Tier 3 | Open the business | $15,000 | $313 | $30,000 | $625 |
| Tier 4 | Start Operations | $20,000 | $417 | $50,000 | $1,042 |
| Tier 5 | Grow the Business | $50,000 | $1,042 | $100,000 | $2,084 |
| Tier 6 | Expand the Business | $25,000 | $521 | $125,000 | $2,605 |
V. MAXIMUM LOAN SIZE:
a. The maximum amount lent to any one individual that qualifies as a Verified Equity Applicant is $125,000, regardless of the number of permits held by that individual or the number of Verified Equity Applicants in which the individual is an owner. For example, if a Verified Equity Applicant is an owner in five businesses, the Applicant may apply for $125,000 and give $25,000 to each business. Or they may decide to apply and give $125,000 to only of one of the five businesses in which they are an owner.
b. The maximum amount lent to any one business is $125,000, regardless of the whether the Loan Applicant has any other outstanding Equity Loans, or the number of permits held by that business. For example, if two partners in a business are both eligible for an Equity Loan, even though each partner could apply for a maximum of $125,000, or $250,000 total, the most they could borrow for the business is only $125,000. This is to minimize the risk associated with a concentration of loans going to one business by helping to ensure diversification in the loan portfolio.
c. If a borrower defaults on a loan in one business, this will not trigger a loan default in another business.
VI. PERSONAL GUARANTEE:
Borrowers that own more than 20% of an entity that receives a loan will be required to provide a personal guarantee for 100% of the loan. For example, if a business has four owners, each of whom own 25%, each owner would be required to guarantee 100% of the loan (not just 25% of the loan).
VII. INELIGIBLE USES OF LOAN FUNDS:
a. Unlicensed cannabis business
b. Non- cannabis businesses that serve the cannabis industry
c. Personal expenses or the acquisition of personal property such as cars, homes, furniture, etc.
d. Buying unlicensed inventory
e. Re-lending or investing
f. To engage in prohibited operations as specified in the regulation